Mitsubishi Heavy chief: In the nuclear business to stay
Japanese reactor builder says AI will help lower costs
TOKYO -- Times are tough for the nuclear power industry. Massive losses at U.S.-based Westinghouse Electric threaten to have its Japanese parent, Toshiba, booted from the Tokyo Stock Exchange, and at France's Areva, ballooning construction costs for its advanced reactors are gobbling up earnings.
In Japan, stringent new safety rules introduced following the 2011 meltdown at the Fukushima Daiichi nuclear plant have made it virtually impossible to build new nuclear facilities in the country.
Shunichi Miyanaga, president of Mitsubishi Heavy Industries, one of Japan's big three reactor manufacturers, along with Hitachi and Toshiba, recently spoke with The Nikkei about the future of the nuclear power industry.
Q: With stricter rules pushing up the cost of building nuclear plants, can the business remain profitable?
A: Nuclear power stations offer an edge in tackling global warming. Whether to stay in the business depends on each manufacturer. It is true that construction costs have surged, but improved safety and other features could increase the value of nuclear facilities. Advances in information technology and artificial intelligence will enable us to cut costs in the near future. We should focus on making efforts over the medium term.
Q: Toshiba has incurred huge losses at its nuclear operations. Will the nuclear business in general remain feasible for the private sector?
A: Companies that want to be engaged in the engineering, procurement and construction processes of nuclear facilities need to conduct in-depth research before the construction starts, and have a clear understanding of how many workers with what kinds of skills can be deployed at each site.
Westinghouse had stepped away from plant construction for a while. But it received EPC orders and had to build a total of four reactor units in two U.S. locations at the same time. I imagine that was the major cause of its problem [of cost run-ups].
Japanese operators, meanwhile, have not had to face such challenges because power companies and the construction sector here have, together, established set procedures for construction. This applies to China, where Westinghouse managed to complete the construction of the same types of reactors it is currently building in the U.S., but in a much shorter time.
Q: What do you think about Siemens of Germany leaving the nuclear business?
A: We will remain in the nuclear business -- a sector that I believe is essential in terms of long-term national energy security. We should keep our core nuclear technologies up-to-date while seeking to improve safety. The business can make money as long as we build nuclear facilities by ourselves. This is partly why we have been conducting feasibility studies in Turkey. We want to maintain our plant-construction capabilities.
Q: Mitsubishi Heavy has agreed to buy a 5%, about 250 million euros ($265 million) stake in a new nuclear fuel company launched by struggling French player Areva. Why are you interested in that unit?
A: This is actually a safe bet for us, because the new company is guaranteed to be completely separate from Areva's overseas nuclear operations.
We have been partnering with Areva for an extended period in fuel and other nuclear-related businesses. That collaboration has helped bridge Japan and France, too. Through a joint venture, for example, we developed the Atmea 1 midsize nuclear reactor. Mitsubishi Heavy has supplied a lot of personnel to the joint operation. By leveraging our French partner's global sales network, I expect to see a steady increase in business opportunities.
Q: You are currently in talks with Hitachi and Toshiba about merging your nuclear fuel operations. How is that going?
A: It's not an easy process, but I hope we all can truly work together to achieve that goal. Areva and Westinghouse together control an overwhelming portion of the market. If we -- the three Japanese manufacturers -- stick only to the domestic market, we will not have a bright future. On the other hand, our nuclear reactor technologies do not overlap, and we cannot expect synergy from consolidating our core nuclear operations.
Interviewed by Nikkei staff writer Tomohiro Ichihara